Wholesaling is a type of real estate investing where the investor, known as a wholesaler, finds and contracts to purchase a property at a discounted price, and then assigns the contract to another investor for a fee (also known as a "spread"). The wholesaler does not actually take ownership of the property and does not fix or rehab the property like in a flipping strategy.
The key to successful wholesaling is finding properties at a significant discount to market value. Wholesalers typically find properties that are in need of repairs, in pre-foreclosure, or are being sold by motivated sellers. They then negotiate a purchase contract with the seller at a price that is below market value, and assigns or sells the contract to another investor who will actually close on the property and fix or rehab it.
Wholesaling can be a low-risk, low-cost way to get started in real estate investing. It requires relatively little capital and can be done with minimal overhead. Additionally, it allows investors to learn the basics of real estate investing without having to put a lot of money at risk.
However, it's important to note that wholesaling can also be a high-competition business. Finding discounted properties can be difficult, and it requires a good understanding of the local market, as well as the ability to network and build relationships with other investors, real estate agents, and motivated sellers.
Additionally, wholesaling requires strong negotiation skills, the ability to identify potential deals and to market the deals to other investors.
In summary, wholesaling is a type of real estate investing where an investor finds and contracts to purchase a property at a discounted price and assigns the contract to another investor for a fee. It can be a low-risk, low-cost way to get started in real estate investing, but it also can be high-competition and requires a good understanding of the local market, strong negotiation skills and the ability to network and build relationships.